Monday’s bond market has opened in negative territory with stock showing early strength. The major stock indexes are starting the week off in rally mode with the Dow up 114 points and the Nasdaq up 26 points. The bond market is currently down 11/32, which will likely push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point if comparing to Friday’s morning pricing.
There is no relevant economic data being posted this morning, so we are seeing stocks drive bond trading during early trading. The rest of the brings us the release of five economic reports that have the potential to move mortgage rates with two of them considered to be highly important to the markets. Fed Chairman Yellen is speaking at a conference in Chicago late this morning. The topic is not expected to bring any surprises or juicy tidbits about the economy or monetary policy and is not expected affect mortgage rates. However, we always have the possibility of something said catching market participants off guard, so these type of speaking engagements are often worth paying attention to. I am not concerned about this speech though and feel there is little likelihood of mortgage rates moving to anything that she may say.
Tomorrow has one piece of economic data that we need to watch and it is one of the more important reports we get each month. The Institute for Supply Management (ISM) will release their manufacturing index for March at 10:00 AM ET tomorrow. This index gives us an important measurement of manufacturer sentiment by surveying manufacturing executives. It is the first piece of data that we see each month that covers the preceding month. In other words, it is the freshest economic data each month. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month's report is expected to show a reading of 54.0, which would be an increase from February's reading of 53.2. This means that analysts think business sentiment improved from last month's level. That would be relatively bad news for the bond market and mortgage rates. A noticeable decline would be favorable for rates while an increase would be considered negative.
Overall, Friday will likely be the biggest day of the week due to the release of March’s Employment report while tomorrow may be runner-up. The middle part of the week should be relatively calm, at least compared to what I am expecting to see in tomorrow and Friday's trading. As we get closer to the Employment report, it would not be surprising to see traders firm up their positions and holdings since that report is a major market-mover. There often is a lot of anxiety in the markets right before that report is posted. Keep in mind though that we can see the markets change quickly any day, so please proceed cautiously if still floating an interest rate and closing in the near future.